I'm the Founder and Managing Partner of Ironfire Capital LLC, which runs a tech-focused hedge fund and angel fund. I did a Ph.D. in Management at the Columbia University Graduate School of Business in New York, with a specialization in Strategic Management. You can follow me on Twitter @ericjackson, subscribe to me on Facebook, follow me on Sina Weibo, or Circle me on Google+. My email is: dr.eric.jackson@me.com

Top Ten Reasons Why Large Companies Fail To Keep Their Best Talent

Whether it’s a high-profile tech company like Yahoo!, or a more established conglomerate like GE or Home Depot, large companies have a hard time keeping their best and brightest in house. Recently, GigaOM discussed the troubles at Yahoo! with a flat stock price, vested options for some of their best people, and the apparent free flow of VC dollars luring away some of their best people to do the start-up thing again.

Yet, Yahoo!, GE, Home Depot, and other large established companies have a tremendous advantage in retaining their top talent and don’t. I’ve seen the good and the bad things that large companies do in relation to talent management. Here’s my Top Ten list of what large companies do to lose their top talent :

1. Big Company Bureaucracy. This is probably the #1 reason we hear after the fact from disenchanted employees. However, it’s usually a reason that masks the real reason. No one likes rules that make no sense. But, when top talent is complaining along these lines, it’s usually a sign that they didn’t feel as if they had a say in these rules. They were simply told to follow along and get with the program. No voice in the process and really talented people say “check please.”

2. Failing to Find a Project for the Talent that Ignites Their Passion. Big companies have many moving parts — by definition. Therefore, they usually don’t have people going around to their best and brightest asking them if they’re enjoying their current projects or if they want to work on something new that they’re really interested in which would help the company. HR people are usually too busy keeping up with other things to get into this. The bosses are also usually tapped out on time and this becomes a “nice to have” rather than “must have” conversation. However, unless you see it as a “must have,” say adios to some of your best people. Top talent isn’t driven by money and power, but by the opportunity to be a part of something huge, that will change the world, and for which they are really passionate. Big companies usually never spend the time to figure this out with those people.

3. Poor Annual Performance Reviews. You would be amazed at how many companies do not do a very effective job at annual performance reviews. Or, if they have them, they are rushed through, with a form quickly filled out and sent off to HR, and back to real work. The impression this leaves with the employee is that my boss — and, therefore, the company — isn’t really interested in my long-term future here. If you’re talented enough, why stay? This one leads into #4….

4. No Discussion around Career Development. Here’s a secret for most bosses: most employees don’t know what they’ll be doing in 5 years. In our experience, about less than 5% of people could tell you if you asked. However, everyone wants to have a discussion with you about their future. Most bosses never engage with their employees about where they want to go in their careers — even the top talent. This represents a huge opportunity for you and your organization if you do bring it up. Our best clients have separate annual discussions with their employees — apart from their annual or bi-annual performance review meetings — to discuss succession planning or career development. If your best people know that you think there’s a path for them going forward, they’ll be more likely to hang around.

5. Shifting Whims/Strategic Priorities. I applaud companies trying to build an incubator or “brickhouse” around their talent, by giving them new exciting projects to work on. The challenge for most organizations is not setting up a strategic priority, like establishing an incubator, but sticking with it a year or two from now. Top talent hates to be “jerked around.” If you commit to a project that they will be heading up, you’ve got to give them enough opportunity to deliver what they’ve promised.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.

Comments

Employees who voice out their opinions are the ones who really care about the goals and growth of the company and their personal growth as well. Otherwise, they wouldn’t waste their breath.

“If there is no problem, then there’s nothing to bring up.”

Many managers fail to remember the HR101 basic – Matching the right talent and their passion to the right responsibilities. (You won’t ask an archaeologist to calculate telemetries) so why expect those who care to stay quiet and be a “yes” person or vice versa.

Employers often take advantage of an employee’s needs (they need the job to survive) over the right match and passion. It’s really the passion that will make them go the extra mile for the company and stay loyal when they’re offered a better pay.

This is a good article that point out just some of the reasons and I agree with most of them. There exists in the retired work force a lot of talent, experience, knowledge, wisdom, passion, ethics and just the desire to be very useful that can still keep up with younger workers. But a lot of this senior talent like me is tired of being jerked around by idiotic rules, changes all the 10 things. Bosses will assign stupid busy work without explaining the “why” and what value it actually adds to the organization. No one questions anything they just take orders from those on top of them in the silo. How can anything run the best when no one questions anything. All most want to do is sit doing nothing waiting for time to pass and retire with their pension. It is a sad state of affairs. So while I feel I have a lot to offer because my current training and certification and brain function is at its peak, I choose to do what I want to rather than undergo the stress that the top 10 causes. I mean why be a masochist.

Most of these reasons for the best talent bailing are about the caliber of EXISTING colleagues, their refusal to change, and the inability of top talent (particularly recent C-suite hires) to implement significant change, which would improve the corporation’s performance.

The book “America’s Corporate Brain Drain” (which predicted the collapse of mega-banks in 2008, goes into this topic in detail, and points to a Bain & Co. study of successfully transformed corporations. The common element was that most of the top management were fired, resulting in a rapid 250 percent per year average stock price increase.

John Hopkins University study that found 90 percent of bypass patients didn’t alter their lifestyle habits even when faced with the choice of “change or die.” People claim they want change, but fear no longer being experts at old, existing methods. Studies show that employees of large companies are more likely to resist change, and those with long tenure were most likely to successfully block new ideas, often by discrediting the person who recommends innovation when the new idea is “bullet-proof.” Big-company employees are three times more likely to be bullied at work (35 percent).

When top talent can’t make a difference, they go where they can build those great ideas, often starting their own companies, competing with the corporations they left.

Most of these reasons for the best talent bailing are about the caliber of EXISTING colleagues, their refusal to change, and the inability of top talent (particularly recent C-suite hires) to implement significant change, which would improve the corporation’s performance.

The book “America’s Corporate Brain Drain” (which predicted the collapse of mega-banks in 2008), goes into this topic in detail, and points to a Bain & Co. study of successfully transformed corporations. The common element was that most of the top management were fired, resulting in a rapid 250 percent per year average stock price increase.

John Hopkins University study that found 90 percent of bypass patients didn’t alter their lifestyle habits even when faced with the choice of “change or die.” People claim they want change, but fear no longer being experts at old, existing methods. Studies show that employees of large companies are more likely to resist change, and those with long tenure were most likely to successfully block new ideas, often by discrediting the person who recommends innovation when the new idea is “bullet-proof.” Big-company employees are three times more likely to be bullied at work (35 percent).

When top talent can’t make a difference, they go where they can build those great ideas, often starting their own companies, competing with the corporations they left.

I’ve worked for one of the largest banks in the world, and found that they employee you to do one small task for a job, meaning they can pay you less.

I’m now working for a smaller company, who ask you to do more in your single role, and pay better, but they lack communications and procedures that I wonder how the company has been so successful.

I’d love to move to a start-up, where I can get a better hands on experience on a wider variety of roles. Money is important to the point that I can afford to live comfortably. Beyond that it’s about my continued development as a professional and as a person. I want to enjoy my job which I spend too much time at, not be a drone!

This world would be better of if companies didn’t list and sell shares. Keep everything private or partnerships, so you can concentrate on your staff and customers, rather than shareholders.

People leave organizations because “glass ceilings” imposed by those above keep them from being allowed into “The Club”. If your talent make a difference to an organization and others take credit, that causes your talent to leave. Credit can be lost by a concept that “Group Think” solved the problem when one person did all the technical leg work, or senior personnel taking credit for the work done by their reports (and then not pull the real success along with them), or by not even realizing the success occurred because they do not recognize the impact of the improvement. Manufacturing went from $100 MM in lost product per year to $20 MM in scrap in four years with only a single individual staying in a technical role. Company introduced two new product lines in the production unit and went from $350 MM in sales to $650 MM. After two years of not changing salary or career status, the person is planning to leave. Find out who makes a difference in your organization, not who others tell you make a difference.

Top talent also needs to take ownership , career planning is in their control.

Both time and money are scarce resources in the modern corporate world. Take the time to review your manager’s coaching efforts to date, and see if they are aligned with your career developmental plan. If you wish to make changes to your development plan, you should be prepared to discuss how your manager can best help you achieve any new goals Make sure that your career plan balances current performance expectations with future career aspirations and challenges you to build on your strengths . Always remember that there will be resources which you want and never get, maybe due to economic factors or your mangers visible or unstated constraints. Make best use of what you have readily available and not what you continue to fight for. Successful people make career out of what they have on hand and seldom squander energy on what they cannot have.

Why is it management cannot sincerely look at productivity? This would solve a lot, as far as not alienating the great workers. I’ve worked at multi-national companies, and they cannot analyze productivity, or tell liars from productive people. I have encountered management gridlock, where they cannot get rid of deadwood stinking up the place. They end up laying off the angry, mouthy productive people just to keep the peace, INSTEAD of sincerely looking at productivity. Then they are stuck with the deadwood again and wonder why the product keeps spiraling. On the otherhand, companies who do serious ranking/rating and get rid of more deadwood, this may be cruel to, but they have less deadwood. I’ve worked at these companies, they also have “erectile dysfuntion”/”lack of commitment to complete the mission” in developing NEW PRODUCT. These companies instead of creating internal startups, buy the finished product within the startup, then start ruining the startup and product with overlaying their own toxic values & inability to deliver. Also, there are always self-annointed “geniuses” who think they are brilliant, and nobody will tell them they are wrong. Real workers cannot wait to get away from these. Managers usually won’t put them in their place either, or actually analyze what they are working on in order to detect the BS. Then there are the real geniuses, who may Not have the speaking or sales skills to create positive change in the company, you will see them leave to create startups or make more money. Usually their managers are too scared to actually enact what the geniuses are wanting, just tell them fibs to keep them quiet. Then they are SHOCKED when the greats quit.